Assume that Scipio Ltd has a controlling interest in Africanus Ltd.As a result of this relationship:
A) the directors of Africanus Ltd have a fiduciary duty to act in the best interests of Scipio Ltd.
B) because of its controlling interest in Africanus Ltd, Scipio Ltd will take over the management of Africanus Ltd from the board of that company.
C) the board of Africanus Ltd will be dissolved as they no longer have any real power in Africanus Ltd.
D) none of the above.

Question

Quizplus · Accepted Answer

Having a controlling interest in a subsidiary company does not necessarily mean that the parent company will take over the management of the subsidiary or dissolve the subsidiary's board of directors. The subsidiary company and its board of directors still have their own legal identity and fiduciary duties to act in the best interests of the company and its shareholders. However, the parent company may have more influence and voting power in the decision-making processes of the subsidiary company.

Assume That Scipio Ltd Has a Controlling Interest in Africanus